BANDAI NAMCO : Consolidated Financial Report375.9 KB

Bandai Namco Holdings Inc.

Consolidated Financial Report for the Third Quarter of

the Fiscal Year Ending March 31, 2023

February 7, 2023

DISCLAIMER

• Bandai Namco Holdings Inc. provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise. In the event of any discrepancy, the original "Kessan Tanshin" in Japanese shall prevail.
• This document contains forward-looking statements that are based on managementʼs estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations.

Bandai Namco Holdings Inc.

Stock Listing: Tokyo Stock Exchange Code Number: 7832

(URL: https://www.bandainamco.co.jp/)

February 7, 2023

Consolidated Financial Report for the Third Quarter of the Fiscal Year Ending March 31, 2023 (Japanese GAAP)

Representative: Masaru Kawaguchi, President and Representative Director

Contact:	Yuji Asako, Director
Scheduled filing date of the quarterly security report:		February 13, 2023
Scheduled starting date for dividend payments:	-
The Financial Highlights of the Financial Results for the Quarter:	Yes
The information session of the Financial Results for the Quarter:	Yes (for institutional investors and analysts)

* Figures are in millions of yen, rounded down

1. Consolidated Results for the Third Quarter of the Fiscal Year Ending March 31, 2023 (April 1, 2022 to December 31, 2022)

1. Consolidated Operating Results (For the Nine Months Ended December 31, 2022)

(Percentages indicate year-on-year changes.)

		Net sales		Operating profit	Recurring profit
		¥ million	%	¥ million	%	¥ million	%
	Third Quarter of the Fiscal Year	743,187	18.3	106,203	15.2	116,961	22.4
	Ending March 31, 2023
	Third Quarter of the Fiscal Year	628,311	15.6	92,153	26.4	95,558	27.2
	Ended March 31, 2022
		Profit attributable to	Basic earnings per share	Diluted earnings per
		owners of parent		share
		¥ million	%		¥			¥
	Third Quarter of the Fiscal Year	84,444	36.9		383.84			-
	Ending March 31, 2023
	Third Quarter of the Fiscal Year	61,703	21.9		280.85			-
	Ended March 31, 2022
(Note) Comprehensive income: 105,000 million yen [69.1%] (FY2023.3 3Q), 62,078 million yen [(7.6)%] (FY2022.3 3Q)
(2) Consolidated Financial Position
		Total assets	Net assets	Equity ratio
		¥ million		¥ million		%
	As of December 31, 2022	907,328		641,071		70.6
	As of March 31, 2022	862,650		584,233		67.7

(Reference) Equity: 640,630 million yen (as of December 31, 2022), 583,995 million yen (as of March 31, 2022)

2. Cash Dividends

					Annual cash dividends
		End of		End of	End of	Fiscal	Total
		first quarter		second quarter	third quarter	year-end
Fiscal Year Ended March 31, 2022		-	¥24.00	-	¥188.00	¥212.00
Fiscal Year Ending March 31, 2023		-	¥27.00
Fiscal Year Ending March 31, 2023					-	¥27.00	¥54.00
(Projections)

(Note) Revision to the projections of cash dividends for the Fiscal Year Ending March 31, 2023: No

Concerning the projected amounts of the year-end cash dividend for the fiscal year ending March 31, 2023, the base dividend is stated based on the Company's basic policy on the distribution of profits. The year-end cash dividend for the fiscal year ending March 31, 2023, will be considered by the Company based on the basic policy on the distribution of profits.

3. Consolidated Projections for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023)

(Percentages indicate year-on-year changes.)

	Net sales		Operating		Recurring		Profit attributable to	Basic earnings
				profit		profit		owners		per share
										of parent
	¥ million		%	¥ million		%	¥ million		%	¥ million		%	¥
Full Fiscal Year	940,000		5.7	128,000		2.0	139,000		4.0	95,000		2.4	431.81
(Note) Revision to the projections: No

* Notes

(1) Changes in Significant Subsidiaries during the Period

(Changes in Specified Subsidiaries Resulting in the Change in Scope of Consolidation): No

(2) Application of Special Accounting for Preparing the Quarterly Consolidated Financial Statements: Yes

(Note) For more details, please refer to the section of "(3) Notes to Consolidated Financial Statements, (Application of Special Accounting for Preparing the Quarterly Consolidated Financial Statements)" of "2. Consolidated Financial Statements and Significant Notes" on page 11 of the attached material.

1. Changes in Accounting Policies, Changes in Accounting Estimation and Restatement
2. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other reasons: No
   3. Changes in accounting estimation: No
   4. Restatement: No

(Note) For more details, please refer to the section of "(3) Notes to Consolidated Financial Statements, (Changes in Accounting Policies)" of "2. Consolidated Financial Statements and Significant Notes" on page 11 of the attached material.

1. Number of Issued Shares (Common Stock)
2. 1. Total number of issued shares at the end of the period (including treasury stock)

As of December 31, 2022	222,000,000 shares
As of March 31, 2022	222,000,000 shares
b) Number of shares of treasury stock at the end of the period	1,983,150 shares
As of December 31, 2022
As of March 31, 2022	2,023,206 shares
c) Average number of shares during the period (cumulative from the beginning of the fiscal year)
For the Third Quarter of the Fiscal Year Ending March 31, 2023	220,000,903 shares
For the Third Quarter of the Fiscal Year Ended March 31, 2022	219,699,622 shares

• Quarterly Consolidated Financial Reports are not required to be subjected to quarterly reviews conducted by certified public accountants or an audit firm.
• Explanation on appropriate use of the projections of business results, etc.
• • Forward-LookingStatements:
    This document contains forward-looking statements that are based on managementʼs estimates, assumptions and projections at the time of publication and those forward-looking statements do not purport to be a promise by the Company to achieve such results. A number of factors could cause actual results to differ materially from expectations. Please refer to the section of "(3) Explanation Regarding Consolidated Projections and Other Forward-Looking Statements" of "1. Qualitative Information Regarding Consolidated Results for the Third Quarter" on page 3 of the attached material for matters pertaining to the earnings projections.
  • To Obtain Financial Highlights:
    The Financial Highlights will be posted on the Company's website on February 7, 2023.

Attached Material
Index
1. Qualitative Information Regarding Consolidated Results for the Third Quarter	2
(1)	Explanation Regarding Operating Results	2
(2)	Explanation Regarding Financial Position	3
(3)	Explanation Regarding Consolidated Projections and Other Forward-Looking Statements	3
2. Consolidated Financial Statements and Significant Notes	7
(1)	Consolidated Balance Sheets	7
(2)	Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income	9
	(Consolidated Statements of Operations)	9
	(Consolidated Statements of Comprehensive Income)	10
(3)	Notes to Consolidated Financial Statements	11
	(Notes on Premise of Going Concern)	11
	(Notes on Significant Changes in the Amount of Stockholdersʼ Equity)	11
	(Application of Special Accounting for Preparing the Quarterly Consolidated Financial Statements)	11
	(Changes in Accounting Policies)	11
	(Segment Information)	12
	(Significant Subsequent Events)	14

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1. Qualitative Information Regarding Consolidated Results for the Third Quarter

(1) Explanation Regarding Operating Results

During the third quarter (nine months) of the fiscal year ending March 31, 2023, the future economic environment, both in Japan and overseas remained uncertain. While measures were promoted to prevent the spread of the novel coronavirus disease (COVID-19) and to relax restrictions on activities, the spread of COVID-19 variants, changes in the social situation, rising raw material and crude oil prices and the weakening of the yen, among other factors, affected economies and society, as well as customer lifestyles and preferences.

Under such circumstances, from April 2022, with Purpose being the ultimate definition of who we are as a Group and the introduction of the new logo, we began our new three-yearMid-term Plan. In the Mid-term Plan, toward the aims of the Bandai Namco Group based on our Purpose, we have established a mid-term vision of "Connect with Fans" that aims to constantly meet the needs of global fans, a wide range of business partners, Group employees, and communities around the world and to foster broad, deep, multifaceted connections. As key strategies, we are promoting our "IP axis strategy," "personnel strategy," and "sustainability." By propelling the emphasis measures, we will take advantage of the worldview and unique characteristics of IP (Intellectual Property: meaning characters and other intellectual property) to further evolve the "IP axis strategy" that aims to maximize IP value through the provision of the optimal products and services at the optimal possible times. We will also strengthen the global development of the "IP axis strategy," enhancing our sense of unity and collective strength under the ALL BANDAI NAMCO concept, in order to achieve continuous growth.

In the third quarter (nine months), in addition to taking swift measures in response to environmental changes, we promoted various initiatives to foster broad, deep, and multifaceted connections with fans through efforts such as strengthening collaboration among development of major IP in the media and our products and services. As a result, revenues and profit for all Businesses exceeded those of the same period of the previous fiscal year. Operating profit grew worldwide due to strong repeat sales of home video games with high profit margins in the Digital Business, and favorable sales of products for the mature fan base, card products and other products and services with high profit margins in the Toys and Hobby Business. In addition, due to the weak yen, the increase in foreign exchange gains associated with transactions denominated in foreign currencies boosted ordinary profit, and profit attributable to owners of parents exceeded that of the same period of the previous fiscal year.

Consequently, the Group's consolidated results for the third quarter (nine months) were net sales of 743,187 million yen (year-on-year increase of 18.3%), operating profit of 106,203 million yen (year-on-year increase of 15.2%), recurring profit of 116,961 million yen (year-on-year increase of 22.4%), and profit attributable to owners of parent of 84,444 million yen (year-on-year increase of 36.9%).

Operating results by segment are as follows.

Effective from the first quarter of the fiscal year ending March 31, 2023, the Group changed the classification of its reportable segments. Consequently, in the following year-on-year comparisons, the figures for the same period of the previous fiscal year have been restated into the figures for the classifications after the change.

Digital Business

As for the Digital Business, in home video games, repeat sales were strong mainly overseas for existing titles for worldwide distribution such as major title ELDEN RING launched in the previous fiscal year, contributing to results. In addition, the sales of multiple new titles launched during the third quarter (nine months) were stable. In network content, sales were strong for key titles such as the DRAGON BALL series and ONE PIECE, and those titles for which we launched service in the previous fiscal year, as a result of collaboration with IP development in the media and ongoing measures targeting users. Furthermore, given the intensifying competition in the market environment of this business, with the goal of providing titles focused on quality, we recorded valuation losses, etc. on certain work in process.

As a result, net sales in the Digital Business were 288,571 million yen (year-on-year increase of 19.1%), and segment profit was 46,642 million yen (year-on-year increase of 23.9%).

Toys and Hobby Business

As for the Toys and Hobby Business, while it was impacted by rising prices for raw materials and fuel caused by progressing depreciation of the yen, products for the mature fan base such as plastic models of the Mobile Suit Gundam series, collectible figures, and character lotteries performed favorably worldwide mainly due to the successful outcomes produced by sales, marketing, and expansion of the product lineup. In addition, long-established IP toys, as well as card products such as the ONE PIECE trading card game and digital cards of the Mobile Suit Gundam series, etc., confectionery products such as Charapaki and capsule toys were popular.

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